This is also evident among UK managers. The BlackRock UK Income team for example, says that the current slowdown in China and emerging markets is providing price opportunities in those companies that have strong market positions in those regions and the potential to recover. Craig Yeaman, manager of the Saracen Growth fund has recently taken a position in emerging market investment specialist Ashmore, not on the basis that emerging markets are on the cusp of recovery, but that they may be better in five years time. Hugh Yarrow, manager of the Evenlode Income fund, has been investing in Unilever, which has also been sold-off because of its emerging markets exposure.
Jan Dehn, head of research at Ashmore Investment Management, points out that many of the fears over emerging markets have been over-done. Many have weathered a significant strengthening of the dollar already, without their US-dollar denominated debt coming under pressure. Equally, he points out that quantitative easing has largely supported Western assets, therefore its withdrawal is likely to hurt developed market bonds and equities more than those in emerging markets.
Certainly, in the very short-term at least, there has been a marked improvement in performance. Among the IA sectors, over one month, China/Greater China sits top, followed by Asia Pacific ex Japan having risen 9.5% and 8.1% respectively. The Global Emerging Markets sector is third, having seen an average 7.7% rise.
Emerging markets may not have hit their nadir. There may still be a crisis lurking within one of the 23 countries that make up the MSCI Emerging Market index. The direction of currencies, one way or another, is likely to have an impact. But investors at least have the protection of low valuations and there are signs that investors believe that those valuations now justify the risk taken in emerging markets.
